Iberia boss wary of BA prioritising Qantas in possible three-way deal

The bosses of British Airways and Iberia are set for showdown talks to 'clarify' what BA's courtship of Qantas means for their own planned tie-up.

Fernando Conte, chief executive of Spanish airline Iberia, said he was told about BA's merger talks with the Australian carrier just one hour before it was revealed to the stock exchange on Tuesday.

A clearly aggrieved Conte told members of the Aviation Club in London: 'I have, at this point in time, not too much information on BA and Qantas.

Wary: Conte fears BA is favouring Qantas over Iberia

'One hour before it (the deal) was published on the stock exchange, (BA chief) Willie Walsh called me and informed me about the fact they were in discussions. So, we have an agenda to meet to clarify what are we talking about.'

He appeared to warn Walsh not to prioritise the Qantas deal ahead of Iberia.

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This could put Walsh in a tough spot as sources suggested the merger with the Australians is moving ahead faster than talks with Iberia, and could be finished ahead of the Spanish deal.

Conte believes harsher regulatory restrictions on the foreign ownership of airlines in both America and Australia means that 'it is more reasonable' for European carriers to consolidate first before looking at mergers across continents.

Asked whether he was saying that BA and Iberia's deal should happen before anything with Qantas, Conte replied: 'I think that's the more rational process.'

The Australian authorities yesterday said they were open to the £4billion merger Anglo-Aussie merger, as long as Qantas retained a significant base down under. But Conte held out some hope that a three-way deal could still be possible.

BA and Iberia have been in discussions since July. But some Spanish investors are said to be concerned about BA's burgeoning pension scheme deficit. Conte said Iberia and BA are 'still in the process' of discussing the pension issue.

It comes as BA (down 0.2p at 156.9p) said it carried just over 2.42million passengers last month, 7.8 per cent fewer than in November 2007.

Worryingly, it reported a 10.8 per cent fall in higher value first and business-class passengers, with a 4.8 per cent fall in standard-class flyers.

The Irish government said it would consider Ryanair's offer to buy rival Aer Lingus, but it will be careful to preserve competition.